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Israel could possibly appropriate billions of shekels from a fund held by the secretive Eilat-Ashkelon Pipeline Co (EAPC) which is owed to Iran.
The US has said that any funds released to Iran as part of the prisoner deal will be restricted to stop the regime using it for military purposes.
Iran's foreign minister said a preliminary deal had been reached with a foreign bank over frozen funds belonging to the Islamic republic
Iran will reportedly access some of its overseas assets frozen by US sanctions after making a deal, Iranian state media has said
Iran has been unable to obtain tens of billions of dollars of its assets mainly from exports of oil and gas in foreign banks, including $3 billion of its funds in Japan, due to USÂ sanctions on its banking and energy sectors.
Tehran urged Seoul to release billions of dollars of Iranian funds frozen in South Korea under US sanctions over its nuclear programme, during a visit by the South Korean premier.
Iran's seizure of a South Korean tanker has caused a diplomatic crisis in the region.
The State Department is suspending funding for a taxpayer-funded Twitter account on Iran that sharply attacked critics of President Donald Trump's hawkish policy.
Iran's frozen funds in South Korea to be released and used for "non-sanctioned goods". This development comes under an emerging deal that has led to the release of five Americans from prison to house arrest.
Iraq agreed to transfer the money to Iran via a European bank, according to state media.